Question 2 Page 13 (13 marks) Ernsting Printers has contracts to complete weekly supplements required by forty six customers. For the year 2018, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 12z million pages For 2019 Ernsting Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups are the primary manufacturing overhead cost drivers. The following information was ga the analysis: and inspections thered during Manufacturing overhead costs Activity level Activity Pool Design changes $60,000300 design changes 5,000 setups Inspections 40.000 8,000 inspections Total manufacturing overhead costs During 2019, two customers, Wealth Managers and Health Systems, are expected to use the following printing services: Wealth Health Design changes nspections Requirement (a) If manufacturing overhead costs are considered as one large cost pool and are assigned based on 12 million pages of production capacity, what is the predetermined overhead rate? Solution